Pollution, the Government, and MSB=MSC- Microeconomics 6.2

Mr. Clifford discusses externalities, focusing on pollution and government roles. He explains that zero pollution is unrealistic and highlights external costs using cigarettes and soda bans in California as examples. The government uses marginal analysis to regulate consumption, balancing social benefits and costs. The video concludes with thoughts on government intervention.

What is an externality in economic terms?

• A subsidy provided to reduce production costs

• A government-imposed tax on goods

• A cost or benefit that affects a party who did not choose to incur it

• A financial transaction between two parties

Why did California schools decide to ban soda sales?

• To increase school revenue

• To promote healthier eating habits and reduce childhood obesity

• To comply with federal regulations

• To encourage students to drink more water

What does the marginal social cost of a product include?

• The cost of advertising the product

• Only the external costs on society

• The production cost and any external costs on society

• Only the production cost

How does the government use marginal analysis in regulating pollution?

• By deciding on an appropriate level of contaminants

• By setting a fixed amount of pollution allowed

• By banning all forms of pollution

• By allowing unlimited pollution

What is one of the government's roles in promoting general welfare?

• To regulate the marginal social benefit and cost of various activities

• To eliminate all forms of pollution

• To provide free healthcare to all citizens

• To decide the exact amount of pollution in the air